New York: Stock markets across the world, which have been in a state of suspense following the US Presidential elections, plunged on Wednesday following Barack Obama’s win.
Earlier during the day, the re-election of President Barack Obama gave markets a short-lived boost. However, following concerns about the outlook of US and eurozone economy, markets dipped as investors were worried about the situation of the two sides.
Earlier on Wednesday, Obama easily clinched a majority in the electoral college, holding on to a raft of key swing states in Tuesday's vote despite only just winning the popular vote over his rival Mitt Romney.
The Standard & Poor's 500 Index posted its biggest daily percentage drop since June, with all 10 S&P sectors solidly lower and about 80 percent of stocks on both the New York Stock Exchange and the Nasdaq ending in negative territory. Both the Dow and the S&P 500 closed at their lowest levels since early August.
The Dow Jones industrial average slid 312.95 points, or 2.36 percent, to close at 12,932.73. The Standard & Poor's 500 Index fell 33.86 points, or 2.37 percent, to 1,394.53. The Nasdaq Composite Index lost 74.64 points, or 2.48 percent, to close at 2,937.29.
The S&P 500 closed below the key 1,400 level for the first time since Aug. 30, while the Dow ended under 13,000 for the first time since Aug. 2.
Energy companies and bank stocks took some of the biggest losses. Both industries presumably would have faced lighter and less costly regulation if Mitt Romney had won the election.
European markets closed sharply lower, with benchmark indexes in France and Germany losing 2 percent. Italy lost 2.5 percent; Spain lost 2.3 percent.
As traders streamed into lower-risk investments, the yield on the 10-year Treasury note plunged to 1.64 percent from 1.75 percent late Tuesday. A bond's yield declines as demand for it increases.
Earnings have been relatively weak, with many companies reporting lower revenue and darkening expectations for the coming quarters.
With more than four-fifths of them having reported, companies in the S&P 500 index say earnings are up about 2 percent over last year, the lowest growth rate in three years, according to data from S&P Capital IQ.
Most industries reacted to the election much as analysts had expected.
Hospital companies soared because of expectations that they will gain business under the health care law, known as ObamaCare. HCA Holdings and Tenet Healthcare leapt 7 percent, Community Health Systems 6 percent and Universal Health Services 4 percent.
Not all hospital companies are expected to benefit. Many of the patients who will gain insurance will be covered by Medicaid plans, which generally do not cover the full cost of care provided by hospitals.
Health insurance stocks sank, defying many analysts' expectations. ObamaCare will expand coverage of the uninsured in 2014, giving insurers millions of new customers. But the overhaul also imposes fees and restrictions on the companies, potentially threatening their profitability. Humana slid 10 percent, UnitedHealth Group 5 percent, Aetna 4 percent and Wellpoint 6 percent.
With Obama seeking to restrain the growth of military spending, defense companies could struggle to win government contracts. Their stocks fell sharply: Lockheed Martin Lost 5 percent, Northrop Grumman 6 percent and General Dynamics 5 percent.
Among the 10 industry groups in the S&P 500 index, financial stocks and energy companies fell the most.
Banks figure to face tougher regulation in a second Obama term than they would have under Romney. JPMorgan Chase and Citigroup fell 4 percent, Bank of America and Goldman Sachs 6 percent and Morgan Stanley 8 percent.
The biggest losers were coal companies, which had hoped that a Romney administration would loosen mine safety and pollution rules that make it more costly for them to operate. Peabody Energy dived 9 percent, Consol Energy 7 percent, Alpha Natural Resources 13 percent and Arch Coal 11 percent.
Oil companies fell less steeply.
Alternative energy companies, especially solar manufacturers, outperformed the indexes on expectations that they will continue to enjoy generous subsidies. First Solar was roughly flat and Yingli Green Energy Holding edged slightly higher.
Trading also reflected the outcome of ballot measures decided in Tuesday's election. After two states approved the recreational use of marijuana for the first time, Medical Marijuana Inc., a company too small to be listed on major exchanges, surged 17 percent.
Other notable moves included Apple, the world's most valuable company. It fell 3 percent to USD 564.57 and has dropped 20 percent from its all-time high of USD 705.07, reached Sept. 21.
With Agency Inputs
First Published: Wednesday, November 7, 2012, 20:11